Persistence pays. After months of trying to persuade Genentech to just give in already, Roche has done its deal. Genentech agreed to a $46.8 billion buyout at $95 per share.
The two companies sent out a joint statement today recommending the deal to shareholders. "Roche and Genentech Reach a Friendly Agreement," the release begins. And while Dr. Charles Sanders, chairman of Genentech's special committee evaluating the deal, didn't sound like he was dancing on the moon, he does use words like look forward and successful. "We believe this is a fair offer for Genentech shareholders," Sanders says in the statement, "and the Committee is pleased to come to a successful conclusion of this process."
Naturally, Roche Chairman Franz Humer (photo) is "delighted" about said successful conclusion. And you have to hand it to the guy, and his underlings, too. They had the guts to issue more than $30 billion in bonds to prep for this buyout, even though they hadn't yet come to terms with Genentech. Call it arrogance or call it confidence, that move negates any uncertainty about Roche's wherewithal to complete the deal.
Roche's U.S. pharma operations will move to Genentech's campus in South San Francisco, which will serve as the combined company's U.S. HQ. And--get this--the combined U.S. pharma ops will operate under the Genentech name. That should help salve some egos out in California. Plus, even more importantly, research and early development will operate as an "independent center" from the existing South San Francisco location. We'll have to wait and see how that independence plays out.
As you know, Genentech has worked hard to keep its employees happy since Roche popped up with its first offer last summer. Genentechers got retention bonuses for sticking around through the will-they-or-won't-they months. Humer said that both companies want to wrap this up quickly, "thus removing uncertainty for employees." The tender offer expires March 25; as of yesterday, 2.9 million shares had been tendered.
Though we feel like this deal has been hanging around forever, it never was a real deal till now. And now, this buyout becomes the third big-time deal in the drugs industry so far this year. Pfizer-Wyeth, Merck-Schering-Plough, and now Roche-Genentech. Some $160 billion total, and 2009 isn't nearly over yet.